So it looks like the DL/NW deal is done and the merger will happen. Many are saying that would trigger a UA/CO merger and my question here is lets say those deals get done, what do you guys think would happen with American Airlines, US Airways, Southwest Airlines, and the rest? Do you see any other mergers happening within the year or you believe that the rest will stay put and continue their service.

it will be interesting to see what AA and US do. Will they decide to link up? Aside from the huge labor problems these two seem to have, their route structure doesn't really overlap too much. AA would be a major player in the important and large northeast market. LGA would probably be the main place where they overlap. CLT would be a good addition to the AA system for a southeast hub, where they have been fairly weak since the RDU closure back in the 90s. CLT rivals ATL as a major financial center in the SE and would be a good southeast hub for AA. AA would also gain the shuttle and a good presence at DCA. The questions remain would they retain a large presence at delay prone PHL? I could see them downsizing that a little, but it is still too big of a market to ignore. BOS would be sizeable but recently they have been downsizing there so would they decide to keep it? In regards to PHX, it would make a good western hub for them, but competition with low fare SWA is fierce there, question would be would they decide to keep the PHX hub or relocate those assets to LAX? Either way could be a way to build up the west coast again. I have a feeling though that these two have a lot more issues to deal with currently than trying to pull off a major merger.

I think CO may make a deal with AA to help offset the costs of a UAL takeover. AA is never going to be allowed to takeover UAL, so perhaps they could help CO digest UAL with an asset purchase. CO perhaps let's AA have UAL's NRT's rights and or gates at LAX in exchange for AA taking on some risk (debt) in the deal.

With regards to US, I can see WN being interested in acquiring US to make them their new ATA. US and WN are already big in PHL, PHX, LAS, BWI. WN could take over much of the domestic flying, US handles the International traffic.

Hopefully US and AA do nothing. With AA's merger record (Air Cal, Reno Air, and TW) it seems like they just tear things apart. With all of the US/AWA merger trouble thats been discussed on here I dont think they need any more problems. I think a combines US and AA would have disgruntled labor groups and a fleet nightmare.

I have long contended that the best thing for AA to do - at least in the shortrun - was nothing.

From a competitive standpoint, there isn't much of a threat that a combined DL-NW will pose to AA that it doesn't already face from both independently. And if they want to go merge - and take on all of the enormous costs, time and energy, plus management focus, that it requires - then let them do it.

AA has far bigger issues to deal with like labor costs and union contracts, and fuel costs, to be dealing with a merger. They should focus on running a profitable airline rather than spending billions integrating another airline that would - in the long-run - add very little value to AMR or its customers.

AA is already the world's largest airline (at least for now). The global AA network is already massive and expansive, and already serves most of the major markets around the world that travelers want/need to get to. Internationally, the only real hole in the network is - obviously - Asia. But as I've long said, AA need not spend billions buying another airline when they could spend far, far less setting up an Asian operation of their own in-house that would be more closely tied to their own network and strategic direction. Domestically, the only places where AA could afford to grow are out west, where it could easily pursue some sort of closer relationship (perhaps equity holding, but definitely not merger) with Alaska/Horizon, and in the East - where it could pick up a great hub in the south at CLT, plus a market-leading position in lots of high-yielding business markets in the Northeast, from US. There again - no need to spend billions on merging with another airline just to get the 2 or 3 pieces that they may actually want.

Quoting STT757 (Reply 3):I think CO may make a deal with AA to help offset the costs of a UAL takeover. AA is never going to be allowed to takeover UAL, so perhaps they could help CO digest UAL with an asset purchase. CO perhaps let's AA have UAL's NRT's rights and or gates at LAX in exchange for AA taking on some risk (debt) in the deal.

I think this is the most likely outcome, if such a CO-UA deal is to occur.

AA and CO could split up United into pieces, with each taking things of strategic importance to them. The only issue that I think may arise here is that there isn't really much that United has that AA wants, overall, that CO would likely let them have if it held the lead in the deal. To me, the assets of prime strategic value to AA - the hubs in ORD, DEN and LAX, plus the slots at Narita and the rights in China - are pretty much all things CO would want. They'd likely let AA have LAX - and focus on SFO - and maybe also let them have some of the Narita slots. But the real cash cows AA would want - like ORD (which the government would resist anyway on market share concentration grounds) and the China rights - CO would clearly want.

Quoting STT757 (Reply 3):With regards to US, I can see WN being interested in acquiring US to make them their new ATA. US and WN are already big in PHL, PHX, LAS, BWI. WN could take over much of the domestic flying, US handles the International traffic.

I highly doubt WN - or anyone - would want to go anywhere near the chaotic Frankenstein mess that US with a ten foot pole. WN is much smarter than that. With all of the time and energy they'd waste just trying to get the US house in order, they could have already set up a new airline to operate these flights for them, or for that matter just started doing it in-house themselves, probably at far lower cost. There is simply no need to spend billions buying another airline with lots and lots of things you either have no interest in that don't fit your business model (Northeast Shuttle, LGA/DCA slots, 2-class airplanes, etc.) and things you don't need anyway (hubs in PHX and LAS) just so you can get an airline with an overwater certification. It would just be a total waste.

If the impending and apparently soon-to-be-announced DL-NW deal does, indeed, spark off a new round of industry consolidation, I think that the most likely outcome for US - by far - would be some sort of a break-up. US is an example of an airline where its whole is worth less than the sum of its parts, and some parts are worth far, far more than others.

PHL is an absolutely insane operational mess, but it does cater to one of the largest and highest-yielding business markets in America, which might be hard for some other airline to resist.

CLT, similarly, is large and growing urban center with huge high-yielding business demand from the banking and finance sector.

PHX and LAS are worthless to just about any legacy airline - as they are Southwest territory.

The Northeast would be worth lots and lots to another airline without competitive issues who might be able to get in there - if DL merges with NW, and CO with UA, that leaves AA is pretty much the only buyer of most of the Northeast assets who wouldn't face a major regulatory hurdle.

I think there is a non-trivial chance that WN buys a defunct F9. I think you may see a surprise bid by AA for a CO merger given the extreme disadvantage it might put AA at. I do think it's very likely that the end condition is three established legacies, several smaller LCC carriers playing a regional role.

Why does everyone assume UA will allow itself to be split up? Granted, Tilton hasn't been exactly quiet about his desire for merging, but at the same time, I really don't think he just wants to dump the company in any way he can. UA is also sitting on a mountain of cash.

I mean, if we're just going to speculate...why couldn't UA and AA split up CO?

Quoting CIDflyer (Reply 2):Aside from the huge labor problems these two seem to have, their route structure doesn't really overlap too much. AA would be a major player in the important and large northeast market. LGA would probably be the main place where they overlap. CLT would be a good addition to the AA system for a southeast hub, where they have been fairly weak since the RDU closure back in the 90s. CLT rivals ATL as a major financial center in the SE and would be a good southeast hub for AA. AA would also gain the shuttle and a good presence at DCA. The questions remain would they retain a large presence at delay prone PHL? I could see them downsizing that a little, but it is still too big of a market to ignore. BOS would be sizeable but recently they have been downsizing there so would they decide to keep it? In regards to PHX, it would make a good western hub for them, but competition with low fare SWA is fierce there, question would be would they decide to keep the PHX hub or relocate those assets to LAX? Either way could be a way to build up the west coast again

A link up between AA and US is unlikely. You make some valid points regarding no route overlap and additions of presence, but the reality is US, MOST of US routes, hubs and customers, are all low yield. By merging w/ US, AA is up against WN big time, would probably have to bring US labor costs up a little (if not equal to AA's) and along w/ PHX and whatever is left of LAS being pathetically low yield, it would be a nightmare for AA. YES CLT, PHL (partially now being pressuured w/ WN) and LGA/DCA slots would be nice, but wouldn not be offset by the disadvantages of what I just wrote above, UNLESS instead of merging AA acquired US and then dumped everything but CLT, parts of PHL and the slots at LGA and DCA.

Quoting STT757 (Reply 3):I think CO may make a deal with AA to help offset the costs of a UAL takeover. AA is never going to be allowed to takeover UAL, so perhaps they could help CO digest UAL with an asset purchase. CO perhaps let's AA have UAL's NRT's rights and or gates at LAX in exchange for AA taking on some risk (debt) in the deal.

Well the whole point of UAL+CO is to create an airline where the other guy is not strong. CO is HUGe to Europe and in the NYC area-and weak on nonstops from the US to Asia. UAL is HUGE to Asia and a little weak on the Europe. Giving away NRT slots would defeat the purpose of a UAL+CO merger.

Quoting FriendlySkies (Reply 8):Granted, Tilton hasn't been exactly quiet about his desire for merging, but at the same time, I really don't think he just wants to dump the company in any way he can.

That's precisely the message he's been sending to the world: somebody take this off my hands so I can get it with my golden parachute.

Quoting Deltaflyertoo (Reply 12):Well the whole point of UAL+CO is to create an airline where the other guy is not strong. CO is HUGe to Europe and in the NYC area-and weak on nonstops from the US to Asia. UAL is HUGE to Asia and a little weak on the Europe. Giving away NRT slots would defeat the purpose of a UAL+CO merger.

Not necessarily if it greases the wheels and gets the deal done faster and easier.

Plus, throwing a few Narita slots - the slots, mind you, just the slots - at AA would be chump change. CO doesn't need nor want every single bit of UA's network.

Not at all, CO would still gain all those nonstops to China from IAD, ORD, SFO. And CO can utilize SFO as an West Coast EWR, combined with CO's 787s on order and they can connect many Cities in Asia nonstop straight to SFO. Allowing for more connections than going via NRT, kind of like how DL gave up on the FRA hub in favor of routing all their traffic through ATL, CVG and JFK.

If DL and NW do the deed...and Delta is the surviving carrier, NW will lose its Golden Chit. DL and AF/KL will do a deal that will make them a global powerhouse in SkyTeam.

CO and UA will merge, with CO being the surviving carrier...and CO will go to STAR (not without a fight from SkyTeam though). CO will do what UA could not with STAR and LH will not be as dominant a force in the alliance as they are today (don't get me wrong...I actually like LH...it's just that CO won't come into STAR without a whole lot of guarantees...).

USAirways...nobody on the horizon for them...unless of course, they do a deal with CO as being the two US players in STAR Alliance and get the anti-trust immunity to coordinate their schedules, fares, etc...unlikely, but one never knows??

AA could be the big loser...nobody for them either...and that is BAD news, because AA going up against CO with UAs Pacific Routes and Delta, with NWs Pacific routes, it's going to be a rough ride for the 'boys in Dallas.

However, if there is one airline that can survive on its own (beside Southwest, which could survive almost anything), it's AA. They could go back to BA and put together a stronger co-op deal than before and with European Open Skies...they just might be able to pull it off this time.

Quoting BAW716 (Reply 15):AA could be the big loser...nobody for them either...and that is BAD news, because AA going up against CO with UAs Pacific Routes and Delta, with NWs Pacific routes, it's going to be a rough ride for the 'boys in Dallas.

Again, I could be wrong, and certainly there are many who share the same view as you - but I just don't see it.

I simply fail to see how other major carriers merging is going to be that massive of a competitive threat to AA. Sure, it's now going to mean one competitor flying to Asia and Europe versus two flying mainly to one or the other each.

But this whole argument that these combined airlines will be able to use their combined market share and network penetration to gain competitive advantage over other airlines just hasn't worked out in the past - it just simply hasn't happened.

AA has an excellent and well-balanced network as it is - like you said, if any of the legacy airlines could survive on their own, it probably would be AA.

As I see it, the only real gaps and opportunities for growth are (in no particular order):

All four of the above could easily be taken care of without much hassle and for far, far less than AA would pay buying and digesting another massive airline, along with all of its hassles and problems.

As I outlined in another thread, my rough calculations estimate that, for a total sticker price of about $4-5 billion, AA could:

1) buy a few slots at Narita, plus buy or lease some 777s and 777LRs, and set up its own operation with nonstop flights from LAX and ORD to major markets in Asia (most all of which, except China and Japan, are already Open Skies)
2) buy requisite slots and gates to expand their presence in the Northeast corridor (LGA and DCA especially)
3) take over US' CLT hub and gain a foothold in the rapidly-growing Atlantic Southeast region at the only viable alternative regional hub to ATL, and back-up and support the MIA hub
4) deepen and strengthen the alliance with AS/QX to bolster AA's presence up and down the West Coast

Again, by my estimates, this all could be done and accomplished in far less time, and for far, far less money, then if AA were to go out and buy an entire other airline (a la DL-NW, or perhaps CO-UA) for just the few parts it actually wants/needs.

Quoting BAW716 (Reply 15):CO and UA will merge, with CO being the surviving carrier...

Honestly, if it's a merger of "whole" carriers, CO would not be in control much beyond in name only. Sure, Kellner et. al. might run the combined airline, but the numbers game makes it plainly evident that United's ways of doing things would generally win out.

Quoting STT757 (Reply 11):Out of the three it is widely accepted that CO has the superior management team, which pretty much puts CO in the drivers seat.

Be careful in that assumption, while CO has a great management team, CO is half the size that UA is and if AF gets involved in the DL/NW tie up it is almost certain that LH will jump into play. With LHs backing UA could very easily become the acquiring carrier. While I feel (and have said in the past) that this will be a merger of equals if LH gets in the mix anything is possible. One thing is for sure UAs and COs interests will both be protected and I don't think that means splitting up either company. Heck I even think CLE could stick around as a hub its well positioned to act as a reliever hub for ORD, EWR and IAD.

While I firmly believe that Tilton and Co. need to step aside it has nothing to do with them being incompetent, in fact I believe they did a bang up job of bringing the carrier through BK. However at this point they need to go simply because they carry with them all the associated baggage that happened during BK (pensions, wage cuts, layoffs) a new upper management team, with a more developed vision, would be a great boost to labor relations. Lets face it I the biggest problem with morale at UA right now is that the company is stagnant, even a small aircraft order and a few new routes would be a great boost.

Quoting Commavia (Reply 16):But this whole argument that these combined airlines will be able to use their combined market share and network penetration to gain competitive advantage over other airlines just hasn't worked out in the past - it just simply hasn't happened.

AA has an excellent and well-balanced network as it is - like you said, if any of the legacy airlines could survive on their own, it probably would be AA.

That's why I said it...if any US carrier could survive on its own...it's AA.

Of course, they're Texans...

Quoting Commavia (Reply 18):'d doubt it, since Continental is - without question, indisputably - the better-run company with the far, far better "ways of doing things" in terms of fiscal stewardship and sound management.

If anything, I suspect it would be the other way around: the United name would be retained, but based in Houston and run by Continental's present (extremely talented and competent) management.

I agree, but the guys in Houston aren't going to let the Continental name go away.

Oh yeah, and these guys, they're Texans too.

I'm not from Texas...but I've sure known my share of 'em...they don't give up without a fight. Ever.

Quoting Commavia (Reply 18):If anything, I suspect it would be the other way around: the United name would be retained, but based in Houston and run by Continental's present (extremely talented and competent) management.

It does seem inevitable, though, that CO's panache will be overwhelmed by the huge mass of the UA component until the crowd-pleasing style can be retaught and relearned by the combined company in the new environment. The risk is that it cannot be retaught - old United dog, new tricks, etc. - and that some new lesser standard of service will prevail, costing the company its yield premiums and high-fare business.

Quoting Commavia (Reply 18):If anything, I suspect it would be the other way around: the United name would be retained, but based in Houston and run by Continental's present (extremely talented and competent) management.

Quoting BAW716 (Reply 15):I'll keep this short (prior to other contrary posts...)

If DL and NW do the deed...and Delta is the surviving carrier, NW will lose its Golden Chit. DL and AF/KL will do a deal that will make them a global powerhouse in SkyTeam.

CO and UA will merge, with CO being the surviving carrier...and CO will go to STAR (not without a fight from SkyTeam though). CO will do what UA could not with STAR and LH will not be as dominant a force in the alliance as they are today (don't get me wrong...I actually like LH...it's just that CO won't come into STAR without a whole lot of guarantees...).

USAirways...nobody on the horizon for them...unless of course, they do a deal with CO as being the two US players in STAR Alliance and get the anti-trust immunity to coordinate their schedules, fares, etc...unlikely, but one never knows??

AA could be the big loser...nobody for them either...and that is BAD news, because AA going up against CO with UAs Pacific Routes and Delta, with NWs Pacific routes, it's going to be a rough ride for the 'boys in Dallas.

However, if there is one airline that can survive on its own (beside Southwest, which could survive almost anything), it's AA. They could go back to BA and put together a stronger co-op deal than before and with European Open Skies...they just might be able to pull it off this time.

Of course, my crystal ball is just as murky as the next guy's...

baw716

For the most part I think this is a pretty accurate assesment. I do think AA will be fine one way or another. I really dont think the combined carriers are going to be that damaging to them. Even if it makes AA the smallest of the three. CO is smaller than AA, UA, DL, and NW and I would venture to say they are very successful.

Quoting Commavia (Reply 16):1) buy a few slots at Narita, plus buy or lease some 777s and 777LRs, and set up its own operation with nonstop flights from LAX and ORD to major markets in Asia (most all of which, except China and Japan, are already Open Skies)
2) buy requisite slots and gates to expand their presence in the Northeast corridor (LGA and DCA especially)
3) take over US' CLT hub and gain a foothold in the rapidly-growing Atlantic Southeast region at the only viable alternative regional hub to ATL, and back-up and support the MIA hub
4) deepen and strengthen the alliance with AS/QX to bolster AA's presence up and down the West Coast

One thing that I think is very important is for AA to get more routes to China for sure. At some point AA needs to be flying: LAX-PVG/PEK and (probably next on the list) DFW-PVG (I believe this could be a big one for them). Im sure AA will also try and expand ORD-Asia at some point.

I would love to see AA get a better foothold in the Southeast, but I dont know if AA could just "take over" CLT. I wish they could. I would love to see it. Even though CLT rivals ATL for the Business center of the Southeast, could AA do this with RDU?

AA already has a good relationship with AS, is there more they could do without buying into them?

Next flights: DFW-DOH-JNB/KGL-DOH-DFW on QR

25 BAW716
: I don't think so. First, AS is a very independent carrier. I don't think they'd go with anyone willingly...right now they have it too good: Strong ma

26 Aaway
: Regarding AA, as I've stated previously (though Commavia has been the leading advocate), I too believe there are too many internal distractions for AA

27 CALPSAFltSkeds
: While everyone talks of cost savings and synergy between carriers in a merger, with today's $100+/barrel oil and an economy that may be headed downwar

28 Njdevilsin03
: Kinda confused still...If UA and Co merge which name will remain will it be Continental after the merger or united?

29 Jetdeltamsy
: Well. That may be your spin on things. But if DL/NW and UA/CO happens, USAir will have to do something or end up the smallest and weakest LCC out the

30 BAW716
: An excellent question. I would answer this way: It depends on who you talk to... AS of and by itself has the largest west coast presence of any airli

31 PavlovsDog
: I can see US Airways being the target of a private equity fund takeover since, as mentioned, the sum of it's parts is worth more than the whole. The c

32 XJETFlyer
: I can see several things happening if CO does a merge also and all this happens. I think we will see a major airline crash for sure now. This is not g

33 CV880
: And a big battle with labor as a 'chaser'...[Edited 2008-04-14 00:38:26]

34 Lufthansa
: I doubt the folks in texas would really have the final say. I'd say some folks up in Manhattan that work in glass towers for big banks and investment

35 StarGoldLHR
: Contented Airlines ? maybe. More importantly will it be a Star Alliance Continental or a Sky Team United ? I know which way I would want it to be.

36 UAL777UK
: I am sure LH is sitting on the sidelines waiting to see what UA and CO do. They are "very close" to UA, they could help UA buy CO, with Tilton and his

37 Lufthansa
: This is EXACTLY what I think will happen. The UA name is too big to many places for them to pick CO despite what the CO lovers on here may be wishing

38 Par13del
: Interesting reading, however, I tend to take things slowly, so lets look beyond the merger to the merger itself, as in DL and NW, what happens, all ta